Law: Income Tax Ordinance, 1979

Section: 156,35,30

(a) Income Tax Ordinance (XXXI of 1979)----Ss. 156, 35 & 30---Rectification of mistake---Carry-forward of business loss---Income from other sources---Interest income---Business income--­Business loss---Carried forward---Set off against interest income--­Rectification of---On pointing out by the Audit Authorities that assessee was not entitled to set off interest income against brought forward business losses, Assessing Officer rectified his order under S.156 of the Income Tax Ordinance, 1979 and interest income was charged to tax under the head "income from other sources" under S.30 of the Income Tax Ordinance, 1979 on the ground that as per S.35 of the Income 'Tax Ordinance, 1979 while setting off carried forward losses the source of business income should be the same---Assessee contended that interest income was adjustable against brought forward losses and any debatable point of law could not be rectified under S.1.56 of the Income Tax Ordinance, 1979---First Appellate Authority found that rectification was carried out on the basis of observation made by the Audit Authorities and not by independent application of mind and that such order under S.156 of the Income Tax Ordinance, 1979 was not maintainable as the same represented the change of opinion and that the two activities of the assessee could not be separated and the decisive test was unity or control and not the nature of the two lines of business---Order under S.156 of the Income Tax Ordinance, 1979 by the Assessing Officer was cancelled by the First Appellate Authority---Validity---Plain reading of S.35 of the Income Tax Ordinance, 1979 would show that, carry forward of business losses was to be set off and restricted only against the profits and gains of the same business or profession and not against any other head of income specified in S.15 of the Income Tax Ordinance, 1979---Interest income of the assessee was declared as income from other sources and charged to tax in the preceding years as a separate head under S.30 of the Income Tax Ordinance, 1979 was immaterial; that mistake apparent from record was observed by the Audit Authorities---Assessing Officer himself applied his mind to such…

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